Countries need to work together to defend the ocean from a steady rise in temperature, pollution and overfishing that threatens its ability to continue supporting marine life and providing food and income to billions of people, according to a new OECD report.
Sustainable Ocean for All: Harnessing the benefits of sustainable ocean economies for developing countries says that with ocean-related economic sectors forecast to grow rapidly over the next decade, ensuring this development takes place in a sustainable way is critical.
While the COVID-19 crisis is hurting key ocean-based sectors, such as tourism and shipping, demands on marine resources for food, energy, minerals, transport, tourism and leisure will persist as the global population grows towards an expected 9 billion by 2050. If managed sustainably, the ocean could have the capacity to regenerate, be more productive, and support more prosperous societies. This will require governments to support those sectors less equipped to foster sustainable ocean economies by facilitating their access to finance and policy evidence.
“More than 3 billion people rely on the ocean for their livelihoods, and we are all dependent on it for supporting ecosystems, providing food and regulating the climate. Yet human activity is causing long-lasting and in some cases irreversible damage to it,” said OECD Secretary-General Angel Gurría. “It is crucial that we invest in ocean-related sectors in a way that fosters environmental and economic sustainability and puts people’s well-being at the centre, especially as we shape the recovery from COVID-19.”
Noting that the poorest countries tend to be both the most exposed to the effects of ocean degradation and the least equipped to respond, the report calls for co-ordinated action and more effective international development co-operation to improve sustainability of the ocean economy. The United Nations Decade of Ocean Science for Sustainable Development, starting in 2021, should foster greater use of science and innovation to develop sustainable practices in a post-COVID world.
The report calls on all countries to phase out government support for environmentally harmful economic activities and use instruments like fees, charges, taxes and tradable permits to discourage over-exploitation, pollution and greenhouse emissions and encourage conservation and sustainable development of ocean activities. Such instruments can also generate much-needed financing for ocean sustainability. Taxes relevant to ocean sustainability – in particular taxes on ocean-related pollution, transport and energy –generated at least USD 4 billion globally in 2018.
The report’s analysis of six ocean-based industries (fishing, fish farming, fish processing, shipbuilding, maritime passenger transport, and freight shipping) shows that they contributed to more than 11% of GDP in lower middle-income countries and 6% of GDP in low-income countries in 2015, compared to less than 2% of GDP for high-income countries. In some low-income or island states, key ocean-based sectors like tourism can account for over 20% of GDP.
This reliance leaves developing countries highly exposed to the risks of deteriorating marine ecosystems, yet less than 1% of foreign aid is spent on conserving marine ecosystems and improving sustainability of ocean-related economic activities. The USD 3 billion in official development assistance (ODA) that was allocated on average to ocean activities annually over 2013-18 has tended to focus on expanding activities like ports or shipping without including efforts to improve sustainability.
Well-designed financing is essential to achieving sustainable ocean economies, yet data on ocean finance is scarce, and it is unclear how much of it contributes to sustainability. To help fill this gap, the report measures global development finance for the sustainable ocean economy and looks at private finance mobilised by ODA for ocean activities. It calls for environmental and social sustainability criteria relating to the ocean economy to be integrated into traditional financial services and investments, financial markets and credit markets.
Read the report Sustainable Ocean for All: Harnessing the benefits of sustainable ocean economies for developing countries.
Access the OECD platform on development finance for sustainable ocean economies
For further information, journalists are invited to contact Catherine Bremer in the OECD Media Office (+33 1 45 24 97 00).
Compliments of the OECD.
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03/09/2020 – Governments have taken unprecedented fiscal action in response to the COVID-19 crisis, but countries will need to support economic recovery in the face of significantly increasing fiscal challenges, according a new OECD report.
Tax Policy Reforms 2020 describes the latest tax reforms across OECD countries, as well as in Argentina, China, Indonesia and South Africa. The report identifies major tax policy trends adopted before the COVID-19 crisis and takes stock of the tax and broader fiscal measures introduced by countries in response to the pandemic, from its outbreak to June 2020.
The report shows that while the size of fiscal packages in response to the COVID-19 crisis has varied across countries, most have been significant, and many countries have taken unprecedented action. It also points out that most countries have adopted a phased approach to COVID-19, gradually adapting their fiscal packages as the crisis has unfolded. Initial government responses focused on providing income support to households and liquidity to businesses to help them stay afloat. As the crisis has continued, many countries expanded their initial response packages. The most recent measures and discussions suggest that the recovery phase will be supported by expansionary fiscal policy in a number of countries.
With countries facing such high levels of uncertainty, policy agility will be key and targeted support measures should be maintained as long as needed to avoid scarring effects, according to the report. Once recovery is well underway, governments should shift from crisis management to more structural tax reforms, but they must be careful not to act prematurely as this could jeopardise recovery. “Right now, the focus should be on the economic recovery. Once the recovery is firmly in place, rather than simply returning to business as usual, governments should seize the opportunity to build a greener, more inclusive and more resilient economy,” said Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration. “One path that should be urgently prioritised is environmental tax reform and tax policies to tackle inequalities”.
Rising pressure on public finances as well as increased demands for fairer burden-sharing should also provide new impetus to reach an agreement on digital taxation. “Tax co-operation will be even more important to prevent tax disputes from turning into trade wars, which would harm recovery at a time when the global economy can least afford it,” Mr Saint-Amans said.
Tax Policy Reforms 2020 also provides an overview of the reforms introduced before the COVID-19 crisis. It highlights continuation of a number of trends identified in previous years, including personal income tax reductions for low and middle-income households and the stabilisation of standard value-added tax (VAT) rates observed across many countries. Corporate tax rates have continued to decline, but at a faster pace than in 2019.
Areas where clear progress has been made include reforms to ensure the effective collection of VAT on online sales of goods, services and intangibles, and the adoption of measures in line with the OECD/G20 Base Erosion and Profit Shifting Project to protect corporate tax bases against international tax avoidance. On the other hand, progress on environmentally related taxes has been slow, with reforms being concentrated in a small number of countries and limited in scope.
The report also notes that there has been a marked change in property taxation compared to previous years, with an increase in the number of reforms in that area, generally aimed at raising taxes.
Media queries should be directed to Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration (+33 1 45 24 91 08), David Bradbury, Head of the Tax Policy and Statistics Division (+33 1 45 24 98 15 97), or Lawrence Speer, in the OECD Media Office (+33 1 45 24 79 70).
Compliments of the OECD.
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Today, the Council agreed to add €6.2 billion to the EU 2020 budget to address the impact of the COVID-19-crisis and to fund inter alia the vaccine strategy. The Council adopted draft amending budget No 8 for 2020 by written procedure.
The revised budget increases payments for the Emergency Support Instrument (ESI) by €1.09 billion to ensure the development and deployment of a COVID-19 vaccine. The European Commission will use this money as a down-payment for pre-ordering vaccine doses.
Draft amending budget No 8 also increases payments by €5.1 billion for the Corona Response Investment Initiative (CRII) and the Corona Response Investment Initiative Plus (CRII+). The money will be used to cover the additional needs for cohesion funding forecast until the end of the year. The CRII redirects unspent money from the EU budget to tackling the COVID-19 crisis, whilst the CRII+ relaxes the cohesion spending rules to increase flexibility.
During its plenary on 14-17 September 2020, the European Parliament is expected to agree on its position on the draft amending budget proposal. Once there is an agreement, the draft amending budget will enter into force.
Compliments of the Council of the European Union.
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By Kristalina Georgieva, IMF Managing Director, Washington, DC | As prepared for delivery
I would like to start by thanking Minister Freeland in her new role as Finance Minister. And my thanks to Finance Minister Clarke of Jamaica, and to Deputy Secretary-General Amina Mohammed.
I will focus my remarks today on two issues.
One, the outlook for the world economy. And two, the implications of this outlook for what we must collectively do.
On the outlook, since we last met in the end of May, incoming data paints a picture that is less bleak. In other words, we are seeing some signs of recovery in the world economy.
The outlook for a number of advanced economies is somewhat less bad than we anticipated. China has turned the corner and is recovering a little faster than anticipated.
And all of this is on the grounds of three important factors. First, a very strong and synchronized policy response by finance ministries, and by central banks.
A massive policy response put a floor under the world economy. This included $11 trillion of fiscal measures. And central banks have done miracles to inject huge amounts of liquidity and support their national economies and – through spillovers – the economies of other countries. We have seen it has become easier for emerging market countries with good fundamentals to raise money.
The IMF has been part of this very strong response. Never in our history have we done so much so quickly, supporting over 80 countries through emergency financing and also through our regular lending programs. We have now extended support of $270 billion – out of the Fund’s $1 trillion capacity – and more than a third of this support has been provided in recent months.
The second reason the situation is better is that the world has learned to function while the pandemic is still around us. We wear masks, we socially distance and we follow protocols.
And that has allowed some rebounds. We are seeing that non-contact-dependent activities like manufacturing are doing somewhat better than expected.
Third, there are improved results in testing and treatment. And we are very hopeful to have a vaccine. So, this is on the more optimistic side.
But it is not good or positive news everywhere.
The majority of emerging markets and developing countries – excluding China – are not seeing a reversal of fortunes yet. In fact, some would see a downgrade in our projections.
And, as we know very well, small countries with tourism-dependent economies are on their knees. Countries with high debt levels are in terrible trouble, and the virus is now moving to places where health systems are weaker.
What does that mean for us? I will focus on three priorities.
One, make sure that we maintain support until we see the economy turn around.
We project a recovery that is only partial and uneven.
We are at a point when we can say that the world economy will lose $12 trillion this year and next year.
To continue support in advanced economies, is somewhat easier. With low interest rates, it is more affordable.
For developing economies and for emerging markets with weaker fundamentals, we must all work to boost the financing that is available to them. All of us.
For the Fund, it means that we are expanding the use of existing SDRs, encouraging a shift from advanced economies towards developing economies so they can rely on strong financing capacity at the IMF on concessional terms.
Two, we have to be mindful of debt levels that are high in many emerging and developing economies – high to a point of suffocating capacity to act.
We have had the Debt Service Suspension Initiative — a great achievement. It has to be extended and both the World Bank and the IMF are calling for a one-year extension. And we are calling for greater private sector participation.
And we have to recognize that – for some countries – this is not going to be enough, and some countries will need a restructuring to bring debt down to a sustainable level.
I call for debt transparency as a priority. If we know debt levels, then this issue is much easier to handle.
Last – but not least – we need to recognize that this crisis is telling us to build resilience for the future.
That means investing in education, digital capacity and human capital – the health systems and the social protection systems. We need to make sure the other crises in front of us – like the climate crisis – are well integrated and addressed. And we need to prevent inequality and poverty – including gender inequality – from raising their ugly heads again.
To do this, we have to take care of taxation in a way that transforms and builds resilience for the future.
Yes, it is going to be hard. Everybody on the political side knows how hard this will be. But after the global financial crisis, we built resilience in the banking sector by reforming it.
Now, we have to do it for the functioning of our economies as a whole.
Thank you very much.
Compliments of the IMF.
The post IMF | Event of the Finance Ministers on Financing for Development in the Era of COVID-19 and Beyond first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Speech by François Villeroy de Galhau, Governor of the Banque de France | Berlin Academy – Berlin, 10 September 2020
Ambassador DescôtesProfessors Schwan, Göring, Kaplan, Ladies and gentlemen,
I am very pleased to be with you today, despite the obstacles related to Covid. The Berlin Academy is one of the essential forums where Franco-German relations, which are at the heart of the European project, can be deepened over time. I am completely convinced of this. I am French, but my family’s roots are in Saarland. My family has lived there since the end of the 18th century and its ceramics manufacturing company Villeroy & Boch is part of the German “Mittelstand”. I love Germany, its language and its culture.
I’ve always been struck by a difference in terminology: the French speak, as romantics, of the Franco-German “couple”, and the Germans speak as engineers and use the term “engine”. But let’s set clichés aside: France also has excellent engineers, and romanticism was also born in Germany with Goethe, and Schiller. And above let’s all see the common reality.
We are experiencing, I believe, one of those “Franco-German moments” that will mark history, and we can now rightly celebrate it:  on 18 May, a Franco-German initiative on the European stimulus package; on 21 July, a historic agreement by the European Council in Brussels on a EUR 750 billion package, supported by a united Franco-German alliance; on 20 August, the Chancellor visited the President of the Republic in Brégançon.
Despite any fears, faced with the threat of the Covid crisis, Germany has clearly and unequivocally opted for Europe and the euro. However, in its early stages, the crisis appeared to distance us, due to our  different abilities to respond, and sometimes in different orders. Europe has once again demonstrated in this crisis that it is stronger than is commonly believed.
I will concentrate here on economic matters, because that is where my competence lies. Naturally, there are broader issues in Europe, that are concrete and emotional: those of our borders, our institutions, our military and diplomatic power, and, in a wider sense, our common identity, which is apparent to our fellow citizens. The President of the French Republic speaks of the necessary “European sovereignty”. I am aware that this expression gives rise to debate. In any case, it means that Europe must not passively put up with events, in the face of the growing rivalry between the United States and China. That we can and should be proud collectively of our achievements. In the economic sphere, these are the single market, the single currency, and our European social model – the soziale Marktwirtschaft. The world needs Europe, today. We must be decisive… and at the same time aware that economic rigour is a prerequisite for our political influence in this world of 2020 so fraught with danger. This brings me to what I want to say today. So far Europe has stood firm in the face of a shock of unprecedented severity: this will constitute the first part of my speech. And I will then address the following question: can reconstruction now strengthen Europe and the Franco-German alliance?
**
I.    So far Europe has stood firm in the face of a shock of unprecedented severity
Over the past six months, we have experienced a crisis of unprecedented proportions: the most serious that the European economy has endured since 1945. The European project has been subjected to a veritable full-scale – almost existential – “stress test”. But, to date, Europe has held firm. Europeans have an essential asset: their common social model based on social solidarity and organised public services. For instance, household purchasing power has been preserved overall, thanks in particular to short-time working measures. This is one major difference with the United States, where 22 million jobs were destroyed in a matter of weeks.
We know that the health shock has affected European countries to varying degrees, but the economic shock has been more symmetrical, due to the restrictive measures that ended up being substantial in all countries. GDP figures for the second quarter show that the recession is widespread, with double-digit percentage declines: -11.8 % in the euro area, -13.8% in France and -9.7% in Germany. Almost half of the differences between our two countries can be attributed to the construction sector, which has contracted much less in Germany, and more than half to the differences in methodology regarding public services statistics.
The European response to the health crisis was initially monetary, thanks to the rapid and decisive action of the Eurosystem. I attended the Governing Council today, and I will not comment immediately on our decisions that Christine Lagarde has just presented. In mid-March, when the economy was threatened by a breakdown in financing, the Governing Council of the ECB put in place an immediate and virtually unlimited liquidity shield. On 12 March, we acted first of all for businesses and SMEs that obtain financing from banks, by allocating them an exceptional refinancing envelope at a very attractive rate: the TLTRO III, which as of their first take up in June represented an amount of nearly EUR 1,350 billion. Then, on 18 March, for large companies and governments that fund themselves through the financial markets, we created the Pandemic Emergency Purchase Programme (PEPP), initially totalling EUR 750 billion, which was increased to EUR 1,350 billion on 4 June.
This massive and rapid action was welcomed but raised questions, particularly in Germany: is the ECB not going beyond its mandate, endangering price stability? And even more “fundamentally “, where do these thousands of billions created all of a sudden come from? I will start with the second question:  the specific feature of a central bank is its ability to create money virtually and without limits. However, it must be borne in mind that the money created by central banks is never simply “given away” permanently: it is loaned for a limited period; and it is channelled into the economy and eventually comes back to the central bank. The central bank can buy time through its monetary creation, and this is important. But it cannot sustainably increase wealth; only our work and economic growth can.
I will now return to the first question, on whether or not we are fulfilling our mandate. In its founding Treaties, and under the legitimacy afforded to it by economic actors and public opinion, the ECB’s measures are bound by two interlinked anchors: its price stability mandate and its independence. They are inherited from the Bundesbank and in my view vital. Independence : the ECB is subject to neither national governments, nor to the pressures of the financial markets nor of passing trends.
The ECB’s monetary policy must continue to support economic activity, for the sake of its own mandate of price stability. In the short and medium term, the crisis will have desinflationary effects that are already noticeable, with inflation temporarily falling in August by 0.2% in the euro area, and by 0.1% in Germany. For a year as a whole, we are expecting a slightly positive inflation of 0.3% in 2020 and 1.0% in 2021. As you know, we unfortunately remain well below our inflation target of “less than, but close to 2%”.
The other aspect of the response to the health crisis are fiscal measures, primarily at the national level. Germany clearly made greater use of the financial leeway it had built up since the 2009 crisis. Its fiscal stimulus package (as a percentage of GDP) is at this stage greater than France’s. The effectiveness of its stimulus package is still difficult to anticipate: in particular, the temporary reduction in VAT appears costly. The French government also announced a EUR 100 billion stimulus package last week. I wish to mention three positive features. It focuses on business supply and investment, and not household demand. This is fully justified, since households, protected by short-time working measures, except for the most vulnerable ones, will have saved nearly EUR 100 billion this year. This plan also has a strong focus on transformation, including ecological reconstruction – a third of the funds are allocated to this area.  Lastly, most spending is temporary and non-recurring, which will make it hopefully possible, once the crisis is over, to return to a sound and sustainable fiscal path.
II.    Can reconstruction now strengthen Europe and the Franco-German alliance?
After the emergency phase, the time has come to exit the crisis. We Europeans have common objectives here: to support growth during the recovery phase, but above all to invest for the future (climate change, digital, health, etc.), in a world that is increasingly uncertain. To achieve this, Europe has four concrete and innovative levers at its disposal: an unprecedented recovery plan, a Financing Union for private savings, its single market, and its commitment to fight global warming.
An unprecedented recovery planThe Franco-German initiative of 18 May, and the subsequent European agreement of 21 July, have been a major step forward for European financial solidarity. This is an unprecedented act of solidarity towards the countries most affected by a pandemic, which is itself unparalleled. For the first time, a common European-wide fund to finance final expenditure has been adopted, representing over half of the package (EUR 390 billion). This is not only a strong political signal, but also an economic rebalancing of the policy-mix in the euro area, which lays the groundwork for a real common fiscal policy. The ECB’s Governing Council has long advocated that monetary policy should not be “the only game in town” in Europe. This is very good news.
The commitment of the German leaders was decisive, but here too I hear questions from my German friends: “we are all for showing solidarity in this crisis, but might this not become the one-way transfer union that we fear?” No, because it is a common debt: Germany will hold 23%, but France too will hold 18%. No, because all our economies will benefit from the health of the other economies in the single market. And, no, because this “Next generation fund” must be the lever for the beneficiaries, starting with the countries of the South, to invest and reform for the future. And let’s rejoice in the fact that we have, no doubt, at last resolved the decade-long and fruitless squabble over the collectivisation of debts. Existing debts are, and will remain, the responsibility of national governments, and that’s the way it should be. Conversely, the future financing needs related to the recovery should be the natural ground in which financial solidarity is exercised, and hence a European bond.
A Financing Union for Investment and Innovation.Alongside the public – fiscal – risk-sharing mechanisms that tend to monopolise the debate, private risk-sharing mechanisms, which are less frequently considered, are just as important and effective. The euro area has an abundant resource at its disposal: a surplus of savings over investment which amounted to EUR 360 billion in 2019, making it the world’s largest pool of private savings. This resource is currently invested outside the euro area, although our potential investment requirements are significant. A better allocation of European private savings, however, requires more effective cross-border financing channels.
We therefore need to combine a more efficient Banking Union and an at last completed Capital Markets Union (CMU) to make a genuine “Financing Union for Investment and Innovation”. Jens Weidmann, the President of the Bundesbank, and I had made a strong case for it in a joint op-ed published in April 2019.
Reviving the single market, our essential assetThere is an essential asset that Europe does not talk about enough: it is its single market. Yet, this is its great economic success, together with the euro. But it is vital to remain vigilant as to the dangers of fragmentation with the Covid crisis. National governments acted appropriately during the critical phase, adopting emergency measures in particular to provide liquidity support to their businesses. But the single market means common rules for businesses: if this were not the case, the divergence between our economies could regrettably increase further. It is therefore necessary to quickly restore the Commission’s control over state aid and fair competition
Furthermore, we must revive the single market, above all because we can optimise its power by combining its various components much better: free movement of goods, naturally; but also the cross-border financing capacity with the financing Union; and last but not least, regulatory power. There are still too many implicit borders and too much fragmentation. We must use regulatory power to guide innovations – the example of the General Regulation on Data Protection (GDPR) -, have the courage to develop an industrial policy with public-private partnerships, as in the case of artificial intelligence and batteries, and make progress, for example, on Franco-German business law.
Climate change and carbon taxLastly, the ecological transition is clearly one of our common structural priorities and carbon tax is generally considered to be the most effective instrument to fight global warming. The European agreement of 21 July provides for the Commission proposing in the first half of 2021 a “carbon border adjustment mechanism”, accompanied by a “revised emissions trading system, possibly extending it to the aviation and maritime sectors.” The advantage of this solution is that it provides the European Union with a resource of its own and restores fair competition between European products and imported products that have a higher carbon footprint. The success of this instrument will depend on our negotiations at the WTO, and on its more extensive integration into European policies (transport, industrial policy, etc.).
**
Earlier I mentioned the difference in terminology between French and German: the French use “couple”, while the Germans speak of “engine”. But I will conclude by quoting a Frenchman, Clément Beaune, the new Minister for European Affairs, who I believe sums up the situation eloquently: “Celebration is necessary, but it is never enough and does not dispense with what has for six decades been the unique strength of the Franco-German relationship: a working relationship, organised at all levels of our political and administrative life, whose power stems from the fact that our two countries have indeed often divergent positions but know, at key moments, how to overcome them by involving others”.  Involving others is what we did in July 2019 with the appointments to the Commission and the ECB, and even more so this year in the face of the crisis. Together we have served Europe and Europeans well. We can be sure of one thing: they will still need our common commitment, on many ambitions and for a long time to come.
Compliments of the Banque de France. 
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EU countries lost an estimated €140 billion in Value-Added Tax (VAT) revenues in 2018, according to a new report released by the European Commission today.
Though still extremely high, the overall ‘VAT Gap’ – or the difference between expected revenues in EU Member States and the revenues actually collected – has improved marginally in recent years. However, figures for 2020 forecast a reversal of this trend, with a potential loss of €164 billion in 2020 due to the effects of the coronavirus pandemic on the economy.
In nominal terms, the overall EU VAT Gap slightly decreased by almost €1 billion to €140.04 billion in 2018, slowing down from a decrease of €2.9 billion in 2017. This downward trend was expected to continue for another year, though the coronavirus pandemic is likely to revert the positive trend.
The considerable 2018 VAT Gap, coupled with forecasts for 2020 – which will be impacted  by the coronavirus pandemic – highlights once again the need for a comprehensive reform of EU VAT rules to put an end to VAT fraud, and for increased cooperation between Member States to promote VAT collection while protecting legitimate businesses. The Commission’s recent Fair and Simple Taxation package (July 2020) also details a number of upcoming measures in this area.
Paolo Gentiloni, Commissioner for Economy, said: “Today’s figures show that efforts to shut down opportunities for VAT fraud and evasion have been making gradual progress – but also that much more work is needed. The coronavirus pandemic has drastically altered the EU’s economic outlook and is set to deal a serious blow to VAT revenues too. At this time more than ever, EU countries simply cannot afford such losses. That’s why we need to do more to step up the fight against VAT fraud with renewed determination, while also simplifying procedures and improving cross-border cooperation.”
Main results in Member States
As in 2017, Romania recorded the highest national VAT Gap with 33.8% of VAT revenues going missing in 2018, followed by Greece (30.1%) and Lithuania (25.9%). The smallest gaps were in Sweden (0.7%), Croatia (3.5%), and Finland (3.6%). In absolute terms, the highest VAT Gaps were recorded in Italy (€35.4 billion), the United Kingdom (€23.5 billion) and Germany (€22 billion).

Member State
VAT Gap %
VAT Gap (in €mn)
Member State

VAT    Gap %

VAT Gap (in €mn)

Belgium
10.4%
3,617
Lithuania
25.9%
1,232

Bulgaria
10.8%
614
Luxembourg
5.1%
199

Czechia
12.0%
2,187
Hungary
8.4%
1190

Denmark
7.2%
2,248
Malta
15.1%
164

Germany
8.6%
22,077
The Netherlands
4.2%
2,278

Estonia
5.2%
127
Austria
9.0%
2,908

Ireland
10.6%
1,682
Poland
9.9%
4,451

Greece
30.1%
6570
Portugal
9.6%
1,889

Spain
6.0%
4,909
Romania
33.8%
6,595

France
7.1%
12,788
Slovenia
3.8%
148

Croatia
3.5%
252
Slovakia
20.0%
1,579

Italy
24.5%
35,439
Finland
3.6%
807

Cyprus
3.8%
77
Sweden
0.7%
306

Latvia
9.5%
256
United Kingdom
12.2%
23,452

Individual performances by Member States still vary significantly. Overall, in 2018 half of EU-28 Member States recorded a gap above the median of 9.2%, though 21 countries did see decreases compared to 2017, most significantly in Hungary (-5.1%), Latvia (-4.4%), and Poland (-4.3%). The biggest increase was seen in Luxembourg (+2.5%), followed by marginal increases in Lithuania (+0.8%), and Austria (+0.5%).
Background
The annual ‘VAT Gap’ report measures the effectiveness of VAT enforcement and compliance measures in each Member State. It provides an estimate of revenue loss due to fraud and evasion, tax avoidance, bankruptcies, financial insolvencies as well as miscalculations.
The VAT Gap is relevant for both the EU and Member States since VAT makes an important contribution to both the EU and national budgets. The study applies a “top-down” methodology using national accounts data to produce estimations of the VAT Gaps. This year’s edition includes notable additions, such as a 20-years back casting exercise, an improved econometric analysis of the VAT Gap determinants and a projection of the potential impact of the coronavirus recession on the evolution of the VAT Gap.
Compliments of the European Commission.
The post VAT Gap: EU countries lost €140 billion in VAT revenues in 2018, with a potential increase in 2020 due to coronavirus first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Today, the Commission presents the assessment of the implementation and effectiveness of the Code of Practice on Disinformation. The assessment shows that the Code has proven a very valuable instrument, the first one of its kind worldwide, and has provided a framework for a structured dialogue between relevant stakeholders to ensure greater transparency of platforms’ policies against disinformation within the EU. At the same time, the assessment highlights certain shortcomings mainly due to the Code’s self-regulatory nature.
Věra Jourová, Vice President for Values and Transparency, said: “The Code of Practice has shown that online platforms and the advertising sector can do a lot to counter disinformation when they are put under public scrutiny. But platforms need to be more accountable and responsible; they need to become more transparent. The time has come to go beyond self-regulatory measures. Europe is best placed to lead the way and propose instruments for more resilient and fair democracy in an increasingly digital world.”
Thierry Breton, Commissioner for the Internal Market, said: “Organising and securing our digital information space has become a priority. The Code is a clear example of how public institutions can work more efficiently with tech companies to bring real benefits to our society. It is a unique tool for Europe to be assertive in the defence of its interests and values. Fighting disinformation is a shared responsibility, which the tech and advertising sector must fully assume.”
The Commission, assisted by the European Regulators Group for Audiovisual Media Services (ERGA), has been working with online platforms and advertising associations to monitor the effective implementation of the commitments set forth in the Code of Practice on Disinformation. The assessment of the Code covers its initial 12-months of operation. It brought positive outcomes. In particular, it increased platforms’ accountability and public scrutiny of the measures taken by the signatories to counter disinformation within the EU. However, the quality of the information disclosed by the Code’s signatories is still insufficient and shortcomings limit the effectiveness of the Code.
The assessment identified the following shortcomings:

the absence of relevant key performance indicators (KPIs) to assess the effectiveness of platforms’ policies to counter the phenomenon;
the lack of clearer procedures, commonly shared definition and more precise commitments;
the lack of access to data allowing for an independent evaluation of emerging trends and threats posed by online disinformation;
missing structured cooperation between platforms and the research community;
the need to involve other relevant stakeholders, in particular from the advertising sector.

Reports on actions taken to fight coronavirus-related disinformation
Since the outbreak of the coronavirus pandemic and ‘infodemic’, the Commission has set out a balanced and comprehensive European approach on coronavirus-related disinformation in the 10 June 2020 Joint Communication and has been in close contact with the platforms adhering to the Code of practice to ensure that its safeguards were effectively applied.
Platforms have shown that they can further improve their performance, when compared with what was achieved previously under the Code. Actions taken have led to concrete and measurable results, i.e. an increase in the prominence given to authoritative sources of information, and the availability of new tools to users to critically assess online content and report possible abuses. The crisis has also resulted in a stepping up of collaborations with fact-checkers and researchers and, in certain cases, the demoting or removing of content fact-checked as false or misleading and potentially harmful to people health.
Therefore, alongside the assessment of the Code of Practice, the Commission is today also publishing the first baseline reports on the actions taken by the signatories of the Code to fight false and misleading coronavirus-related information until 31 July. This includes initiatives to:

promote and give visibility to authoritative content at EU and Member State level. For example, Google Search gave prominence to articles published by EU fact-checking organisations, which generated more than 155 million impressions over the first half of 2020 and LinkedIn sent the “European Daily Rundown”, a curated news summary by experienced journalist, to close to 10 million EU interested members.

improve users’ awareness: Facebook and Instagram directed more than 2 billion people to resources from health authorities, including the WHO.

Detect and hamper manipulative behaviour: Twitter challenged more than 3.4 million suspicious accounts targeting coronavirus discussion.

Limit advertising linked to coronavirus disinformation to prevent advertisers from capitalising on them. All platforms have facilitated coronavirus-related ads from public health authorities and healthcare organisations.

Delivering on the Joint Communication, the Commission will gather, on a monthly basis, specific indicators from the platforms to monitor the effectiveness and impact of their policies in curbing the spread of disinformation related to the coronavirus pandemic.
Building both on the actions listed in the Joint Communication, and addressing the shortcomings identified in today’s assessment of the Code, the Commission will deliver on its comprehensive approach by presenting two complementary initiatives by the end of the year: a European Democracy Action plan and a Digital Services Act package. They will further strengthen the EU’s work to counter disinformation and to adapt to evolving threats and manipulations, support free and independent media, better regulate the digital informational space and upgrade the ground-rules for all internet services. A public consultation on the former is ongoing until 15 September while the consultation on the latter ended earlier this week.
Background
The assessment published today delivers on a specific action point of the December 2018 Action Plan against Disinformation, which charged the Commission to carry out a comprehensive assessment of the Code at the conclusion of its initial 12-month period of application. Online platforms signatories to the Code (Google, Facebook, Twitter, Microsoft, Mozilla and, as from June 2020, TikTok) committed to put in place policies aimed at:
(1) reducing opportunities for advertising placements and economic incentives for actors that disseminate disinformation online,
(2) enhancing transparency of political advertising, by labelling political ads and providing searchable repositories of such ads,
(3) taking action against,  and disclose information about the use by malicious actors of manipulative techniques on platforms’ services  designed to artificially boost the dissemination of information online and enable certain false narrative to become viral,
(4) setting up technological features that give prominence to trustworthy information, so that users have more instruments and tools to critically assess content they access online, and
(5) engaging in collaborative activities with fact-checkers and the research community, including media literacy initiatives.
The Code asked signatories, which include also trade associations representing the advertising industry, to report on the implementation of their commitments, based on annual self-assessment reports, and to cooperate with the Commission in assessing the Code. The assessment published today takes into consideration these annual self-assessment reports, a study carried out by an independent consultancy, Valdani, Vicari and Associates, a monitoring report carried out by European Regulators Group for Audiovisual Media Services (ERGA), and the Commission’s report on the 2019 elections.
Compliments of the European Commission. 
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The European Securities and Markets Authority (ESMA), the EU securities markets regulator, today publishes a Working Paper on Closet Indexing Indicators and Investor Outcomes.  The study finds that investors can expect lower net returns from closet indexers than from a genuinely actively managed fund portfolio. A summary of this study was also included in the Trends, Risks and Vulnerabilities report published on 2 September.
Closet indexing refers to the situation in which asset managers claim to manage their funds in an active manner while in fact tracking or staying close to a benchmark index. The authors of the study looked at annual fund-level data for the period 2010 to 2018, finding that investors saw both lower expected returns and higher fees when they invest in closet indexers compared with active funds. Overall, the net performance of potential closet indexers was worse than the net performance of genuinely active funds, as the marginally lower fees of potential closet indexers are outweighed by reduced performance.
Closet indexing is a practice that has been criticised by supervisors and investor advocacy groups on numerous occasions in recent years, over concern that investors are being misled about a fund’s investment strategy and objective and are not receiving the service that they have paid for.
ESMA and NCAs have worked to identify potential closet indexers by examining metrics on fund composition and performance and by conducting follow-up detailed supervisory work on a fund-by-fund basis. ESMA recognises that such metrics, while imperfect screening tools, are a useful source of evidence to help direct supervisory focus.
This study published today does not aim to identify particular closet indexers, but analyses how closet indexing relates to the costs and performance of EU-domiciled equity funds. In so doing, it aims to contribute to the understanding of closet indexing in the EU.
Compliments of the European Securities and Markets Authority.
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Today, the European Commission adopted its first-ever Strategic Foresight Report, aiming to identify emerging challenges and opportunities to better steer the European Union’s strategic choices. Strategic foresight will inform major policy initiatives. It will support the Commission in designing future-proof policies and legislation that serves both the current needs and longer-term aspirations of European citizens. The 2020 Report presents the rationale for using foresight in EU policy-making, and introduces a comprehensive concept of EU resilience.
European Commission President Ursula von der Leyen said: “In these challenging times, political leaders have to look wide and far ahead. This report shows the importance of resilience for a strong and lasting recovery. We aim to steer the necessary transitions in a sustainable, fair, and democratic manner.”
Vice-President Maroš Šefčovič, in charge of interinstitutional relations and foresight, said: “The pandemic has not only thrown a sharp light on our vulnerabilities, but has presented opportunities that the EU cannot afford to miss. It has also reaffirmed the need to make our policies evidence-based, future-proof and centred on resilience. We cannot expect the future to become less disruptive – new trends and shocks will continue to affect our lives. The first-ever Strategic Foresight Report therefore sets the scene for how we can make Europe more resilient – by boosting our open strategic autonomy and building a fairer, climate-neutral and digitally sovereign future.”
In light of the ambitious Recovery Plan for Europe, the 2020 Strategic Foresight Report considers EU resilience in four dimensions: social and economic, geopolitical, green, and digital. For each dimension, the report identifies the capacities, vulnerabilities and opportunities revealed by the coronavirus crisis, which need to be addressed in the medium- to long-term.
Embedding Strategic Foresight into EU Policy-making
Strategic Foresight helps improve policy design, develop future-proof strategies and ensure that short-term actions are coherent with long-term objectives. The Commission has relied on foresight for many years; it now aims to embed it into all policy areas, to exploit its strategic value. A first example is the recent Communication on Critical Raw Materials, with foresight helping boost the EU’s open strategic autonomy. Mainstreaming foresight will be achieved by:

systematically conducting foresight exercises for all major policy initiatives;
publishing forward-looking, annual Strategic Foresight reports, analysing emerging trends and challenges to inform our policy- and decision-making;
supporting the development of foresight capacities in EU and Member State administrations; and
building a collaborative and inclusive foresight community with EU and international institutions and partners.

Monitoring Resilience
The 2020 Strategic Foresight Report proposes prototype resilience dashboards to kick‑start discussions among Member States and other key stakeholders on how best to monitor resilience. These discussions can help identify and assess strengths and weaknesses at EU and Member State level, in view of emerging megatrends and anticipated challenges. It can help answer the following question: are we, through our policies and recovery strategy, making the EU more resilient?
Next Steps:

The 2020 Strategic Foresight Report and its successors will inform President von der Leyen’s annual State of the Union addresses and Commission Work Programmes. They will also feed into the forthcoming inter-institutional negotiations on our first-ever multiannual programming.
The overarching Strategic Foresight agenda will chart EU political priorities and key initiatives in Commission Work Programmes, as well as major cross-cutting issues: such as the EU’s open strategic autonomy for a new global order; the future potential of green jobs and required skills; and the intersections of the green and digital transitions across policies.
The annual European Strategy and Political Analysis System (ESPAS) conference  in November 2020 will offer the opportunity to discuss the topic of next year’s Strategic Foresight Report and launch an EU-wide Foresight Network.
The development of shared reference foresight scenarios to inform future policy debate, to ensure coherence across policies, and to serve as a shared, forward‑looking framework for policy proposals. This can also feed into the Conference on the Future of Europe.

Compliments of the European Commission.
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Good morning,

Yesterday I interviewed the candidates put forward by the Irish government for the post of Commissioner, Ms Mairead McGuinness and Mr Andrew McDowell.
Both candidates showed great commitment to the European Union and to the job of Commissioner – excellent candidates. They also both clearly have significant experience of EU matters, of course from different perspectives.
Following these interviews, I have decided to propose to the Council and the European Parliament the appointment of Ms McGuinness to the post of Commissioner. She will be in charge of financial services, financial stability and the Capital Markets Union. Executive Vice-President Valdis Dombrovskis will assume responsibility for the trade portfolio, and he will remain the Commission’s representative on the Eurogroup, alongside with Commissioner Gentiloni.
Ms McGuinness has significant political experience on EU issues, having been an MEP since 2004 and currently holding the post of first Vice-President of the European Parliament. This experience is crucial in carrying forward the EU’s financial sector policy agenda and ensuring it supports and strengthens the Commission’s key priorities, notably the twin green and digital transition.
I would like to express my thanks to Mr McDowell for his application and wish him well in his future endeavours.
Thank you.
Compliments of the European Commission.
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